On the Royals, rebuilding and the value of losing

In the weeks before a franchise-defining trade, White Sox general manager Rick Hahn sequestered himself inside his office and formulated an informal checklist. Point by point, the text doubled as an argument.

The club was nearing a blockbuster deal that would send ace Chris Sale, one of the best pitchers in the majors, to Boston for a haul of prospects. The move would shape an offseason and the future of baseball on the South Side of Chicago.

But first, Hahn had questions. For weeks, his staff had discussed how a Sale trade might be perceived by the fan base, how it might affect attendance and revenues, how it would be received in the confines of the clubhouse, especially among veterans. Sale was one of the best pitchers in franchise history. A deal would signal that more trades were imminent.

Entering his fifth season as Chicago’s general manager, Hahn was sensitive to every morsel of data, every piece of possible collateral damage. Yet, as he ran down the list and outlined a memo that explained the process behind the trade, he was struck by one thought: For eight straight years, the team had missed the playoffs, its average win total hovering just below 78. It was time to to tear it down, embrace a 95-loss season and think about the future.

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“The last place you want to be,” Hahn says now, “is caught in that middle.”

One day later, the White Sox traded outfielder Adam Eaton to Washington for another prospect haul. Seven months later, they dealt starting pitcher Jose Quintana to the Cubs for four more young players. Today, the team owns what is widely regarded as the top farm system in baseball, a stacked talent pool that could serve as the foundation for a contender.

“In the end,” Hahn says, “our projection was that the fruit of it was going to be worthwhile.”

The story of the White Sox is just one rebuilding plan in a sport fixated on young talent. Yet, it offers another worthwhile lesson as the Royals contemplate how to forge their own future, how to build another champion.

In October, the Houston Astros claimed their first World Series title after constructing a plan that included 100-loss seasons and a full-scale teardown. The year before, it was the Cubs who built from the ground up and won it all. Add in the 2015 Royals, and the last three world champions have collected trophies after meticulous, deliberate rebuilding jobs that all included one distinguishing characteristic: Losing. Lots of it.

Sometimes it was historic, sometimes just painful. But in the five years before their championships, the Astros, Cubs and Royals all lost at least 95 games, bottoming out near the bottom of the standings before reaping the rewards for such misery.

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As baseball’s winter meetings loom next week, the Royals are still devising a plan for their future. Their window to contend appears to have closed as four pieces of their championship core hit free agency last month. They do not know what they will look like in 2018, or after. They are still pursuing first baseman Eric Hosmer, waiting on the market for the franchise cornerstone, hoping to retain a homegrown star on a long-term deal. But in conversations with club officials and industry sources, in surveying their finances and position, a clear picture emerges: The Royals are headed for a substantial rebuild across the next two or three seasons, even if Hosmer returns.

The scale of the process remains unknown. It is perhaps dependent on the future of Hosmer, though club officials see rebuilding scenarios that include the All-Star first baseman as well.

In interviews, Royals general manager Dayton Moore has publicly mulled the idea of taking a step back, though he loathes the philosophy of “tanking”, a maneuver to intentionally be bad at the major-league level. And yet, the Royals, as currently constructed, are positioned to lose a lot in both 2018 and 2019. They stand to gain from it, too.

There is little value in getting caught in the middle, as Hahn found the hard way. There can be value in losing.

“When a team is pondering the full-scale rebuild,” says Chaim Bloom, the Tampa Bay Rays’ senior vice president of baseball operations, “even independent of any benefits from bottoming out, it’s sometimes might be the right course for them to say: ‘OK, how can we get back to winning 90 games?’ ”

Some of the advantages are obvious. To bottom out and lose more than 95 games ensures a pick near the top of the draft, the easiest way to find a cheap, difference-making player. In the current system, a losing season and high pick also ensures more money to spend throughout the draft. (More on that in a moment.) But Bloom and other executives say the advantages of rebuilding, of losing at the major-league level, can go beyond the obvious.

In most cases, a full-scale teardown will offer financial flexibility, so in addition to cost savings in the short term, it can allow a team to better plan out its win cycle, Bloom says.

The phrase “win cycle” is a term of art in baseball. There is no formal definition or specific length. But in simple terms, it is the act of acquiring a wave of cost-friendly young talent that can crest at the same time and offer a window to contend.

The Royals skillfully pulled off the feat last decade, drafting Mike Moustakas and Eric Hosmer in consecutive years, trading Zack Greinke for Lorenzo Cain and Alcides Escobar before the 2011 season and signing Billy Butler and Alex Gordon to early contract extensions. The Astros, the reigning world champions, are in the midst of their own win cycle right now.

A win cycle, however, has a beginning and end. Players age. Stars become too expensive. And while one cycle can be extended with shrewd free agent signings, contract extensions and player development, it can also come to a halt when those moves don’t pan out. (See Gordon’s four-year, $72 million deal before 2016.)

And here, of course, is the question the Royals must answer this offseason or soon. When can the next win cycle begin? What players could be a part of it? To undergo a roster teardown like the one in Chicago will almost surely push the time line back. But sometimes a reset can be helpful.

“Sometimes there can be advantages,” Bloom says, “to just being able to sync up talent for a point in the future when you might have a better core.”

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In the pursuit of acquiring and synching up talent, the Royals would be open to trading assets on their current roster, Moore says. The club, however, lacks clear trade chips outside of a select list of players. Left-hander Danny Duffy is under contract for four more seasons, while reliever Kelvin Herrera will be a free agent after next season. Catcher Salvador Perez is also under club contract for another four seasons — though the club would likely be hesitant to part with another franchise fixture.

Still, Moore says the team would listen to anything.

“If somebody blows your doors off on something, you always have to look at it,” he says. “You always got to look at it.”

If not trades, the Royals will focus on acquiring talent in the usual venues: the international market and the draft. And the rules regarding the latter offer some measure of incentive to lose. Kansas City has not drafted in the top five since 2012 — when it made its seventh top-five selection in eight years. This fact alone is a reflection of its successful run from 2013 to 2017. Yet it has limited the club’s ability to acquire premium talent.

There is enough variability in the draft that sometimes a top-five pick becomes Kyle Zimmer or Bubba Starling, while sometimes a late first-round pick becomes Mike Trout or Aaron Judge. But as Moore said earlier this month, “the only way to really build your farm system through the draft, and do it quickly, is to draft high.”

This is especially true in the current environment. A decade ago, the Royals spent more than $24 million in the draft across three seasons, including a then-record $10 million in 2008, the draft that netted Hosmer. The team poured millions into the strategy, and they loaded up on young talent, resulting in the best farm system in baseball.

Other teams, such as the Pirates, Nationals and Cubs, followed the same template. But by 2012, Major League Baseball had curbed spending by instituting a slotting system. Draft spending was capped and teams were allotted signing bonus pools which could be spread out among picks. The surest way to have more money in your pool was to lose a lot of games and draft high.

In time, baseball has sought to lessen the incentive to lose by compressing the bonus dollars allotted to the No. 1 pick. But in the big picture, the motivation remains the same.

“The only way to spend a lot of money in the draft is you’ve got to pick high, and you don’t want to pick high,” Moore says. “You want to be in the playoffs.”

For now, the Royals are seeking to find the most efficient way back to the top. But in the end, the path back to contention will likely require a trip back to the bottom. For the last two seasons, Kansas City has set out to contend and landed closer to the middle. As a rebuilding process begins, one thing is clear: That’s not where they want to be.

“The model of starting from scratch and building is not new,” says Detroit Tigers general manager Al Avila. “It’s just a matter of being able to really have the patience and the stomach for that process at the beginning.”